When people find themselves needing additional money, their first option is to take out a loan against their home. But what happens to people who do not own their homes, those who are renting or living with their parents? It does not mean that because an individual does not own a home he is financially unstable. In fact, many non-homeowners earn huge salaries but they have their own reasons not to buy homes. It could be because of the nature of their jobs like they have to constantly move from place to place or they still have to make up their mind where to buy a property and settle down. Or, they may still be saving money to pay the down payment for their dream home.
The thing is, homeowner or not, people do need extra money at times and they would need a loan for that. Lenders are aware of this need so they have come up with loan products that even non-homeowners can avail of. Foremost among the non-homeowner loans is the unsecured personal loan. Here, the borrower is not required to put up any collateral so non-ownership of a landed property that can be mortgaged is not an issue. The primary requisite, however, is a sterling credit record and proof of paying capacity.
If you are a non-homeowner, you can easily apply and be approved for an unsecured personal loan especially if you are employed full time. Most likely, you may be required to submit proof of your identification and residence, pay stubs, and perhaps a record that shows you’ve been paying your rents regularly. If you have a bad credit or if the lender is not convinced that you satisfy their requirements, you may be asked to provide security for your loan. In lieu of your home, you can offer as collateral any of your valuable assets, like vehicle, jewelry, or bank deposits, that are worth as much as the loan you are applying for.
However, do not expect much in terms of loan amount for non-homeowners loans, especially if what you’re getting is an unsecured loan. Specific lending programs for unsecured loans to non-homeowners are usually capped at certain limits depending on the particular lender. On the other hand, if you are providing collateral, you can borrow money only up to the loanable value that may be allowed on the assets you are using as collateral. Also, interest rates on non-homeowner loans tend to be higher especially with unsecured loans although you may still get a good rate if you have excellent credit. Unless the loan purpose is specifically stated in your loan contract, non-homeowner loans can generally be used for anything including debt consolidation, car purchases, and personal consumption like travel, weddings, and such.
Be sure to shop around for the best loan deals for non-homeowners. You may want to first approach your bank for loan products that can meet your particular requirements. Or you can do a search online for other loan providers but make sure to do business only with reputable establishments. When you have obtained a non-homeowner loan, make it a point to pay your installments promptly. Do not think that because you do not own a home that the lender can foreclose, you can be pretty safe. Do remember that the lender can always take over the assets you have pledged as collateral. And even if it’s an unsecured loan that you got, the lender has other means to collect payment from you. Besides, you wouldn’t want to jeopardize your credit standing because if you lose your credit, what else can you offer lenders if you need another loan in the future?